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Sales of new home rise in November, but 2011 is weak

WASHINGTON — Americans bought slightly more new homes in November, but 2011 will likely end up as the worst year for sales in history.

The Commerce Department says new home sales rose 1.6 percent last month to a seasonally adjusted annual rate of 315,000. That's less than half the 700,000 new homes that economists say should be sold to sustain a healthy housing market.

It's also below the 323,000 homes sold last year — the worst year for sales on records dating back to 1963. December would have to produce its best monthly sales total in four years for 2011 to finish ahead of last year's total.

New homes account for less than 10 percent of the housing market. But they have a big impact on the economy. Each new home built creates roughly three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

Economists note that housing is a long way from fully recovering and that many people are opting to rent because they can't afford to buy or don't feel a home is a wise investment right now.

Builders have stopped working on many projects because it's been hard for them to get financing or to compete with cheaper resale homes. In November, builders slashed prices to their lowest levels in more than a year. The median sales price of a new home dropped nearly 4 percent last month to $214,100.

The market for new single-family homes has all but disappeared over the past year. Nationwide, just 158,000 such homes are now for sale, an all-time low.

Sales are slumping even though mortgage rates have fallen to record lows. This week, the average rate on a 30-year fixed home loan dropped to 3.91 percent, the lowest rate ever, mortgage buyer Freddie Mac said Thursday.

In selling new homes, builders must compete with foreclosures and short sales — when lenders accept less for a house than what is owed on the mortgage.

Sales of previously owned homes are also dismal. They rose slightly last month to a seasonally adjusted annual rate of 4.42 million units, the National Association of Realtors said this week. That's below the 6 million that economists say is consistent with sales in a healthy market and barely ahead of 2008's revised totals, which were the worst in 13 years.

Other reports

Here's a summary of other economic reports released Friday:

• Consumers spent at a lackluster rate in November as their incomes barely grew, suggesting that Americans may struggle to keep spending more into 2012. Consumer spending rose just 0.1 percent in November, matching the modest October increase, the Commerce Department reported Friday. Incomes also rose 0.1 percent. That was the weakest showing since a 0.1 percent decline in August. Both the spending and income gains fell below expectations.

• Orders for durable goods rose in November by the most in four months as an increase in demand for aircraft outweighed declines in spending on computers and equipment. Bookings for equipment meant to last at least three years rose 3.8 percent after no change in prior month that was previously reported as a decline, data from the Commerce Department showed Friday. Demand for business equipment excluding military hardware and aircraft dropped 1.2 percent in November, the biggest decline since January.

Sales of new home rise in November, but 2011 is weak 12/23/11 [Last modified: Friday, December 23, 2011 7:31pm]
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